Reps. Becerra, Goodlatte debate if President Obama is guilty of executive overreach

This is a rush transcript from "Fox News Sunday," June 29, 2014. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

House Speaker John Boehner charges with abusing his executive power, and plans to sue.

(BEGIN VIDEOTAPE)

REP. JOHN BOEHNER, R-OHIO, SPEAKER OF THE HOUSE: I believe the president is not faithfully executing the laws of our country.

PRESIDENT BARACK OBAMA: They're not doing anything. And then they're mad that I'm doing something.

WALLACE: How strong is the case against president? And with the Supreme Court ruling against some of his recess appointments, is Mr. Obama guilty of presidential overreach?

We'll talk with two House leaders, Bob Goodlatte and Xavier Becerra.

Then, a suspect in the Benghazi terror attack is now in federal custody outside Washington, and ISIS continues its advance in Iraq, as pressure mounts on the embattled government in Baghdad.

SECRETARY OF STATE JOHN KERRY: In the end, the Iraqis are responsible for their defense and nobody expected wholesale dissertation.

WALLACE: We'll talk with former CIA and NSA director, Michael Hayden, who says, as a country, Iraq has already ceased to exist.

Plus, the Tea Party is dealt a blow in Mississippi. Our Sunday panel offers their scorecard in this year's Tea Party versus GOP establishment matchup.

And, our power player of the week, the collector of some of Washington's greatest treasures pays it forward.

Does it make you happy to see all of these things that you've gotten over the years?

UNIDENTIFIED MALE: I love it. It's part of my life.

WALLACE: All, right now, on "Fox News Sunday."

(END VIDEOTAPE)

WALLACE: And hello again from Fox News in Washington.

Republicans have long accused President Obama of exceeding the powers granted him by the Constitution. But this week, House Speaker Boehner announced he will now move to sue the president for executive overreach. And the Supreme Court ruled 9-0, Mr. Obama has gone too far in making some of his recess appointments.

Fox News chief congressional correspondent Mike Emanuel has more on what all this means for the balance of power here in Washington. (BEGIN VIDEOTAPE)

BOEHNER: What we have seen certainly over the last five years is an effort to erode the power of the legislative branch.

MIKE EMANUEL, FOX NEWS CHIEF CONGRESSIONAL CORRESPONDENT (voice- over): Speaker John Boehner announced Wednesday the House will sue President Obama for exceeding his constitutional authority.

BOEHNER: I believe the president is not faithfully executing the laws of our country, and on behalf of the institution and our Constitution, standing up and fighting for this is in the best long term interest of the Congress.

EMANUEL: Mr. Obama has recently issued executive orders directing the Department of Labor to offer gay couples family leave, raising the minimum wage for federal contractors, stopping deportations of children here illegally, and more than two dozen unilateral changes to Obamacare.

OBAMA: I'm not sure which of the things I have done they find most offensive. But they have decided they're going to sue me for doing my job.

EMANUEL: Then Thursday, in a unanimous opinion, the Supreme Court said President Obama exceeded the limits of his executive power when he decided back in January 2012 to bypass the Senate and name three new members to the National Labor Relations Board.

Writing for the court, Justice Stephen Breyer found that mechanism enough to keep the president at bay. Quote, "We hold that for purposes of the recess appointments clause, the Senate is in session when it says it is, provided that under its own rules, it retains the capacity to transact Senate business. The Senate met that standard here."

(END VIDEOTAPE)

EMANUEL: Boehner called that a victory for the Constitution and against President Obama's aggressive overreach. That sets the stage for the House to vote on July to move forward with the lawsuit -- Chris.

WALLACE: Mike, thanks for that.

We have invited two congressional leaders to debate these issues which go to the core of our Constitution. From Virginia, the Republican chair of the House Judiciary Committee, Bob Goodlatte. And here in Washington, the head of the House Democratic caucus, Xavier Becerra.

Gentlemen, President Obama dismissed the threat of a lawsuit saying that House Speaker Boehner and Republicans want to sue him for doing his job. Here's what he had to say.

(BEGIN VIDEO CLIP)

OBAMA: My message to Republicans is join us. Get on board. If you're mad at me for helping people on my own, why don't you join me and we'll do it together? We'll do it together. I'm happy to share the credit.

(END VIDEO CLIP)

WALLACE: Chairman Goodlatte, the president says, it's all politics, a stunt, he calls it.

REP. BOB GOODLATTE, R-VA.: Absolutely not, Chris. This is all about the United States constitution. Article 1 says the president of the United States -- I'm sorry, the Congress is the legislative body. All legislative powers herein granted shall rest in the Congress of the United States. Article 2 says the president shall faithfully execute the laws.

So, it's not about our wanting to stop him from doing his job. It's our wanting to do the job that the Constitution prescribes and not to take powers resting in the Congress and to, through not enforcing laws or changing laws that have been passed, taking power from the legislative branch.

It's very important and this should be bipartisan. People are standing up to protect the balance of power, the check against a too powerful executive branch. It's been done in the past. It needs to be done again.

WALLACE: Let me put up a few of the unilateral actions President Obama has taken in recent years. Take a look at this list. February 2011, ordered the Justice Department to stop defending the Defense of Marriage Act. June 2012, declared deportation of some illegal immigrants -- deferred, rather, deportation of some illegal immigrants. February 2014, raised the minimum wage for federal contractors. And over the years, repeatedly made dozens of changes to Obamacare.

Congressman Becerra, what is the president's legal authority to take all of these unilateral actions without going back to Congress?

REP. XAVIER BECERRA, D-CALIF.: Well, Chris, first, the list that you showed are all things the American public wants to see, and the president is saying, Congress, if you're not going to do your job of passing the laws to make those things happen --

(CROSSTALK)

WALLACE: Wait a minute, Congressman -- wait, wait. The Constitution does not say if it's popular you can exceed your authority.

BECERRA: Let me finish my thought.

WALLACE: It's kind of irrelevant.

BECERRA: The president said, I'm going to do what I can within the confines of the law to make this work. So, the minimum wage increase isn't for all Americans. It's only for federal -- people who work with federal contract.

WALLACE: What is his legal authority to take this action without going back to Congress?

BECERRA: The president has the authority as the executive to implement the laws. If there's a law that says we will pay a federal contractor money, the president can say, OK, federal contractors, you can't gouge your workers because you're getting taxpayer money to do the work. And so, therefore, the president can say, at least pay them the federal minimum wage.

WALLACE: But is he implementing the law?

BECERRA: Absolutely, he's implementing the law.

WALLACE: Or is this more, is he rewriting the law?

BECERRA: No, he's not rewriting it, because he's simply implementing it. He's only doing it where he has the power at the executive for the federal government. He hasn't set a minimum wage for everyone who works for private sector. That would require Congress.

WALLACE: They already have to pay the minimum. He's raised the minimum wage.

GOODLATTE: Chris, if I might --

WALLACE: Go ahead, Chairman Goodlatte.

GOODLATTE: Well, I just want to say these are people working in the private sector, and the fact that their employer has entered into a contract to provide services for the government, but they also may do business with a whole host of other things doesn't give him under the law the power to contract with them and to add a multitude of different conditions, including what they have to pay their employees.

BECERRA: Sure it does, Bob. You know that. Those contractors don't have a right to get taxpayer money. They enter into a contract with the federal government. They know the terms of the contract.

(CROSSTALK)

WALLACE: But they were already getting the federal minimum wage. He raised the wage.

(CROSSTALK)

BECERRA: He said, if you're going to want to work for the federal government, get a contract from the federal government, you're going to have to pay this minimum wage. There's nothing wrong with that. You don't have to contract with the federal government.

GOODLATTE: The law doesn't give him that authority.

WALLACE: That's not really the issue. The issue is what gives -- and let's not take that case, let's take all of the things that he has done on ObamaCare. Congress wrote the law. What gives him the legal authority to rewrite the law?

BECERRA: Because you as the executive have the authority and the obligation to make sure laws work. That you act responsibly. If you're going to cross the street --

WALLACE: By whose judgment you act responsibly?

BECERRA: -- just because you see a green light doesn't mean you cross the street. You look both ways before you cross the street.

GOODLATTE: Chris, if I may --

BECERRA: That's what the president is doing. He's saying we're going to implement the law, but we want to make sure it works properly.

WALLACE: Go ahead, Congressman Goodlatte.

GOODLATTE: Chris, if I may, the law, ObamaCare, one of the things the president -- the law says you have fewer than 50 employees, you don't have to comply with the employer mandate in ObamaCare. So, the president now says, well, if you have between 50 and 100. You don't have to comply, now if you have more than 100, you do.

Where does it say in ObamaCare he has the authority to make that legislative decision?

(CROSSTALK)

BECERRA: -- interpreted law.

GOODLATTE: He needs to go back to the Congress if he wants changes like that.

WALLACE: I want to move along -- I think we've kind of explored this. We certainly haven't settled it.

(CROSSTALK)

BECERRA: He didn't say you don't have to abide by the law. He said we're going to defer implementation until we're ready to go on that aspect. And that's what small businesses were asking for. Let us be ready.

WALLACE: We've done this few doze times.

BECERRA: He wants to make sure small businesses are ready.

WALLACE: Congressman Goodlatte, the courts have as a rule dismissed these cases saying that Congress doesn't have legal standing and in fact that there are other remedies at Congress' disposal. You could cut funding for the executive branch of the various programs. Ultimately, you could impeach the president.

Chairman Goodlatte, how do you answer that question that you have other remedies? And secondly, even if you go forward and even if the courts accept the suit, by the time it gets all the way through all the legal machinations, Barack Obama will be out of office.

GOODLATTE: Well, first of all, with regard to the powers that the Constitution provides the Congress in its system of checks and balances, there are several. We have the power of legislation, the power of the purse.

We have in the Senate, the power to confirm appointments, which was what the Supreme Court decision was all about. We have the power of oversight, holding hearings.

But we also have the power to bring causes of action when we believe that the president of the United States is exceeding his authority and is trampling upon Article 1 of the Constitution, powers granted to the Congress.

So, to me, it makes a whole lot of sense to do this. It's not the first time the court has been asked to do it. We have a case pending right now --

(CROSSTALK)

WALLACE: And what about the argument by the time this gets settled, Barack Obama will no longer be president, sir?

GOODLATTE: Correct. That's why we passed a law through the House, and I'm proud to say five Democrats joined with all the Republicans to say, yes, we should make it easier for this process to take place -- so that the court would hear a case when a majority of either the House or Senate or both elect to bring a case, and would do it in an expedited fashion with a three-judge panel and an immediate appeal to the Supreme Court which could be revived in six to seven months.

WALLACE: Of course, it hasn't gotten through the Senate.

(CROSSTALK)

WALLACE: I have to move on, sir. We're running out of time.

Meanwhile, there was another big development this week. That is that the Supreme Court ruled unanimously 9-0 that the president violated the Constitution when he made appointments to the National Labor Relations Board while the senate was on brief breaks in its work.

Here is Republican Senator Mike Lee reacting to the court's decision.

(BEGIN VIDEO CLIP)

SEN. MIKE LEE (R), UTAH: The court said the president doesn't have the power to decide when the Senate is in session. Only the Senate can decide that. When the Senate decides that it's not in recess, the president may not issue a recess appointment.

(END VIDEO CLIP)

WALLACE: Congressman Becerra, 9-0 in the Supreme Court. Isn't this another clear case of presidential overreach?

BECERRA: When you face a Republican majority in the House that is playing this game of shut-down politics, blocking everything the president wants --

WALLACE: This has nothing to do with the House.

BECERRA: Including the confirmation of judges and of agency heads --

WALLACE: The how does not confirm --

BECERRA: I understand. In the case of the House, for example, the House decided to litigate --

WALLACE: I'm asking you a specific question. The 9-0 decision by the Supreme Court on making recess appointments when the court said, and it was a liberal justice, Stephen Breyer, who wrote the decision, when the court said the Senate wasn't in session. Isn't this presidential overreach?

BECERRA: What the president did, what presidents have done since the time of horse and buggy, throughout Republicans and Democrats alike, is used to power to appointment to go out and do that. During the recess when the president did these appointments, the question was, did he have the power? Was Congress in recess?

OK, the judges have clarified that. That's fine. That doesn't stop the fact that Republicans have used this shut-down politics to try to keep the president from being able to enforce the law and govern by denying him his nominations for judges and heads of agencies.

The president said it already. He's going to act if Congress won't. Congress has the ability to act to change the law.

(CROSSTALK)

WALLACE: I have one more thing I want to ask.

BECERRA: But if I could just conclude the last point --

(CROSSTALK)

WALLACE: I have one more thing. Excuse me, excuse me. Excuse me, Congressman, I'm going to ask another question.

BECERRA: All right.

WALLACE: The Supreme Court, because we're running out of time, the Supreme Court is expected to announce tomorrow the decision tomorrow on the Hobby Lobby case. That's a question as to whether or not under Obamacare the president can mandate a private company to provide birth control coverage to its workers if that's in violation of the owner's religious beliefs.

Let me begin with you, Congressman Goodlatte, and I'm going to ask you to take 30 seconds to answer this. What do you think is at stake here in terms of executive powers and how do you expect the court to rule in Hobby Lobby?

GOODLATTE: Well, in that case, I think the statute itself as interpreted by the president violates the First Amendment of the Constitution. I'm hoping the court will uphold the rights of individuals for their expression of their religious freedoms.

Now, the end does not justify the means in these cases. And 9-0 decision last week was the 13th time the Supreme Court has voted 9-0 that the president has exceeded his constitutional authority.

WALLACE: Let me interrupt you and go to Congressman Becerra briefly, 30 seconds. If I own a company and I have strong religious beliefs, the government can tell me I have to violate those beliefs in terms of providing birth control coverage to my employees?

BECERRA: The government will not violate anyone's religious beliefs. But no one has the right to discriminate against a woman because of her own beliefs. I believe that the Supreme Court will find that no business --

WALLACE: She doesn't have to work with the company.

BECERRA: -- no business should be allowed to discrimination against women. And we've gone beyond that. We should also try to pay them equally for the work they do.

WALLACE: We're not talking about that. We're talking about the birth control mandate.

BECERRA: Let's protect the woman's rights to be able to earn the same pay and live their lives --

WALLACE: What about the owner's right to his religious freedom, his religious beliefs?

BECERRA: The owner has a right to his or her religious beliefs, but that doesn't mean you get to discriminate against women if a woman have different beliefs than what the owner has and the woman wants to exercise her rights under the Constitution.

WALLACE: Congressman Becerra, Congressman Goodlatte, sorry for all the interruptions. It was like herding cats today. Thank you both. Thanks for joining us. Appreciate it.

BECERRA: Appreciate it.

GOODLATTE: Thank you, Chris.

WALLACE: Is President Obama out of line with his executive orders and recess appointments? Our Sunday panel weighs in next.

Plus, what would you like to ask the panel? Just go to Facebook or Twitter @FoxNewsSunday, and we may use your question on the air.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: I might have said in the heat of the moment during one of these debates, I want to raise the minimum wage so sue me when I do, but I didn't think -- I didn't think they were going to take it literally.

BOEHNER: The Constitution makes it clear that the president's job is to faithfully execute the laws. And in my view, the president has not faithfully executed the laws.

(END VIDEO CLIP)

WALLACE: President Obama and House Speaker Boehner facing off this week in a battle over the separation of powers.

Brit, big picture, has Barack Obama gone beyond some of his predecessors in his exercise of executive power?

BRIT HUME, FOX NEWS SENIOR POLITICAL ANALYST: I think unmistakably so. We -- presidents do tend to stretch these things and go as far as they can, but when you get shut down 9-0 by the Supreme Court, it ought to be a pretty clear warning you're out of bounds here, buddy.

And now, we look at these instances such as those at you cited in the previous segment where the president has simply chosen to postpone or ignore explicit provisions of the law, something that I think constitutionally he's not empowered to do and I think it's obvious. The question, of course, is whether a suit by one house of Congress, will find standing in the court so that the court will act -- the high court will act on this.

WALLACE: Ever since the president's re-election, he has made it clear that if Congress blocks him, he is going to act on his own. Here's one of his statements.

(BEGIN VIDEO CLIP)

OBAMA: I'm going to be working with Congress where I can to accomplish this. But I'm also going to act on my own if Congress is deadlocked. I've got a pen to take executive actions where Congress won't. And I've got a telephone to rally folks around the country on this mission.

(END VIDEO CLIP)

WALLACE: Julie, are they at all worried at the White House about the pushback they got this week, both from the House in the form of this threatened and I think almost certain lawsuit from House Republicans, and also by the 9-0 decision in the Supreme Court? Or do they think that they can continue on this path with little consequence?

JULIE PACE, THE ASSOCIATED PRESS: I think the reaction is different, that's what the difference between the Supreme Court and the Boehner threat of a lawsuit.

With Boehner, I think they feel like they can continue to go out and say that this is a stunt. It plays into what we already know is a bad relationship between the White House and the House GOP. So they think this is just another notch. They don't think this changes the argument there at all.

The Supreme Court decision, though, I think is a bit different because it was unanimous, which was surprising to some people. And there's a difference between the House GOP, which is a standard group opposing the president saying something and the Supreme Court saying something unanimously. And it also, I think, actually could have an impact on some decisions that the National Labor Relations Board made.

WALLACE: Karl, I think it's fair to say you worked at a White House that took a pretty expansive view of executive powers, whether it was signing statement s by President Bush when he was signing bills into law or the way he waged the war on terror. Can you honestly say that you believe this president is going further than President Bush did in exercising his executive powers?

KARL ROVE, FORMER BUSH WHITE HOUSE ADVISER: Absolutely.

First of all, let's divorce international. The president is given under the Constitution broad authority in waging war independent of the Congress. But when it comes to the execution of the laws passed by Congress, the statutes, a president must first and foremost look whenever they take an executive action, an executive order, for example, they must look for, is there a statutory basis to do so? I remember plenty of times as we discussed executive orders, the counsel's office and other legal authorities inside the administration were weighing in on what was the statutory authority for the president to take his action.

One of the instants was we reviewed, does the president have authority to take a class of individuals and exempt them from the enforcement of immigration laws? And the lawyers came back and said, you have an ability to exempt individuals but no ability to exempt a class. And yet, this president has exempted a class of people from enforcement of immigration laws.

Where -- I actually read the Affordable Care Act. I can find little or no authority at all for the 39 exemptions that he's gotten. There's no statutory in the law that says the president can delay the individual mandate, delay the employer mandate.

(CROSSTALK)

WALLACE: What about (INAUDIBLE) that you hear from Congressman Becerra that this is the implementation of law?

ROVE: Look, look, the Constitutions says, Article 1, the legislative branch is the Congress. The legislative power is embodied in the House of Representatives in the United States Senate. It does not say the legislative power is shared between the president and the Congress.

Now, there's been this tension for 200-some odd years, but this president, again, where -- he delayed in the employer mandate, not only the employer mandate, but the tax that is collected as a result of this. This is imperial power. This is George III. This is some monarch to say I am the law.

And, frankly, the House suit, which will not be a Republican suit, it will be a suit on behalf of the institution of the House, saying our authority under the first article of the Constitution is being impaired by the president's actions I think is going to be important for the country over the long term.

WALLACE: We asked you for questions for the panel. And we got this from Matthew Murray on Twitter. "If Boehner wins lawsuit, will Obama adhere to the decision? How are courts going to enforce if he doesn't?"

Kirsten, how do you answer Matthew?

KRISTEN POWERS, FOX NEWS CONTRIBUTOR: Well, I mean, the Supreme Court obviously doesn't have an army to enforce decisions, but the president has to comply with decisions of the Supreme Court. And I am actually a surprising supporter of the Boehner lawsuit if he, in fact, does have standing because I think that the administration has clearly been shut down by the Supreme Court already on various decisions, and I think they have showed a somewhat hostility to certain things such as supporting the buffer zone that the Supreme Court just struck down in Massachusetts.

And if you listen to what Congressman Becerra was saying when he was answering your questions, he never once argued the law. He never once said, actually, these things are constitutional because X, Y, and Z. He kept saying, well, the people want this. Or this is a good thing and so, therefore, we should do it.

But that's not how it's done. It has to be constitutional. It has to comport with the law. And the fact they can't argue that is concerning.

WALLACE: To the degree that this becomes an issue and one could argue whether it will or not, in the November election, Brit, who's got the better side of the argument, the president saying, "Hey, look, the Congress is blocking me from taking action that you want, that's popular," or the Republicans saying, "This guy is out of control"?

HUME: My guess is this is an issue that kind of rallies the base in both parties.

You know, when the president defies the Republican-controlled House, I think his supporters by and large cheer. There's no action that that was a political event where he was making those statements about how they won't do anything so I'm going to do things. That sounds good to the ears of those who support him and want him to have his way.

On the other hand, I think this evident defiance of the laws as written by him infuriates conservatives and Republicans.

So, as for those in the middle, I think they're guided by the opinions of the Supreme Court. And when the Supreme Court makes an unmistakable statement of the kind it did this week, I think that sways public opinion, that people begin to say, wait a minute, wait a minute, this -- he may be well off base here.

WALLACE: Julie, 30 seconds left. It looks like with immigration reform falling apart in the Congress, the president may take more executive action on deportations this summer. Given all of this blowback, do you expect him to go full speed ahead?

PACE: I think he will go full speed ahead on some executive actions, but what White House officials have been saying for months is that they actually think the pool of actions that they could take is far more limited than what you hear immigration reform activists talking about.

WALLACE: All right. We have to take a break here. We'll see you all a little later.

You heard what the panel had to say. Now, tell us what you think about the Republican lawsuit against the president. Join the conversation on Facebook, with other FNS viewers.

Up next, as ISIS gained ground in Iraq, how do we stop the growing terrorist threat? We'll talk with former CIA and NSA director, General Michael Hayden, after this quick break.

(COMMERCIAL BREAK)

WALLACE: Developments in Iraq have continued to move quickly this week. The extremist group ISIS has seized more territory in western Iraq. President Obama announced he'll ask Congress for $500 million to train and arm Syrian rebels. And both Sunni and Shiite leaders are trying to force Iraqi Prime Minister Maliki from power. Joining us now with the latest, Fox News senior White House and foreign affairs correspondent Wendell Goler. Wendell.

WENDELL GOLER, FOX NEWS CORRESPONDENT: Chris, the president is very reluctantly boosting U.S. military aid to Iraq on the condition he says that President Nouri al-Maliki forms a government that invites Kurds and Sunni Muslims to share power with the country Shia majority. Mr. Obama is not asking -- insisting that Maliki step down, though officials here feel Maliki is a big part of the problem. His alienation of Sunnis has led many to support the terrorist group ISIS as an alternative for the Iraqi government. Even some former Iraqi military leaders who served under Saddam Hussein are now fighting against the government, which is part of the reason that Iraqi troops were crumbling. ISIS still controls a good chunk of the country, but the government's made some gains this weekend, trying to retake Tikrit, and it's getting some help from Russia, which is sending a couple of dozens second-hand war planes, which can be used against ground forces and mobile targets. They're also sending trainers for Iraqi pilots. That will set up a rare case of U.S. and Russian military advisers in the same country battling the same enemy, though neither the Russian trainers nor the U.S. advisers are expected to see combat.

Meanwhile, Ahmed Abu Khattala, a suspected leader of the 2012 attack on the U.S. consulate in Benghazi has made his first court appearance. Four Americans including Ambassador Chris Stevens were killed in that attack. Abu khattala was brought to a federal courthouse Saturday, a few blocks from the capital here in Washington, D.C. He's being held in Virginia, though a number of Republicans would rather he be held in Guantanamo Bay. This would be a high profile test of the Obama administration's goal of prosecuting terror suspects in civilian courts. Chris.

Now let's bring in the former director of the CIA and NSA, General Michael Hayden. General, welcome back to "Fox News Sunday."

GEN. MICHAEL HAYDEN, FORMER CIA AND NSA DIRECTOR: Morning, Chris.

WALLACE: Let's start where Wendell Goler finished with Abu Khattala. He was captured about two weeks ago, of course. The one suspect we have in custody in the Benghazi terror attack case. There were some who thought that the U.S. would take some time on that ship, bringing him back to the U.S., bringing him back into the legal system while they could conduct a more robust interrogation. Are you surprised that he was brought back and put into the legal system so quickly? And was that a mistake?

HAYDEN: I'm a little surprised. I thought they would take longer, and press accounts this morning, Chris, said that he is continuing to withhold information. Look, the court process and the intelligence process can be sequential. I just wish we had a little more time with the intelligence process before we begin to get all the protections that an Article 3 court gives him in the American system.

WALLACE: Should he have been taken to Guantanamo for extended questioning?

HAYDEN: He should have been questioned extensively, Chris. Where that sure would have taken place, I'm fairly indifferent about. What worries me the most, though, Chris, is we will not put anyone in Guantanamo. And therefore, the only people we feel we are able to capture are those that we feel we can put in an Article 3 court, the ones that we have a chain of evidence against. I think that actually constrains our ability to fight what the president freely admits is a war.

WALLACE: All right, let's turn to the situation in Iraq. You said this week that Iraq as we know it has ceased to exist. What do you mean by that, general?

HAYDEN: Well, first of all, Chris, I think I'm right. And I hope I'm wrong. Iraq, Syria, Lebanon, those are artificial states created by European diplomacy, almost a century ago, for the convenience of European diplomats. There were realities on the ground that were kept suppressed, first by European imperial power and then by the Cold War and then by Arab autocrats. All those are gone now, particularly Arab autocrats. And all those realities that continue to exist are now bubbling to the surface. I thought about this a long time, Chris. I don't think ISIS takes over all of Iraq. I think we're seeing somewhat now the limits of their power. But for the life of me, I couldn't figure out how the Iraqi government certainly as currently constituted, gets the territory back in the Sunni part of Iraq that ISIS has already conquered.

WALLACE: So, are you suggesting that we're going to end up with a partition of Iraq? You have said it, it is the Kurdistan, the Kurds up in the northeast, Sunnistan, where ISIS is in control in the west, and Shiastan in the southeast, is that what we're looking at?

HAYDEN: I think we get there, and we get -- we may already be there. It dates back to a sense. It may take a while before we get there in a de-jure sense, but look what the Kurds did, Chris. They straightened out the border. They grabbed Kirkuk because I think they realized that this is end game. That they have to get the territory they want now because everyone is going to be frozen into place as the country sadly ceases to exist.

WALLACE: So is the Obama administration wasting its time now trying to force al Maliki and to create a unified Iraqi government if there's not going to be any unified Iraqi state?

HAYDEN: No, I don't think so. And again, Chris, I said I hope that I was wrong, that there's still some play here that we could actually create a government in Baghdad that was a national unity government, and right now, the Maliki enterprise isn't any of those three things. I don't think it's a high probability shot, and Chris, if Maliki continues in government, it's a zero-probability shot. I know what Wendell said about our not insisting that Maliki go, but frankly, I can't see this happening at all if he remains in power based on his track record.

WALLACE: In your scenario, ISIS ends up holding on to a big chunk of western and northern Iraq that you call Sunnistan. Do we just sit by and let this group, which al Qaeda says is too violent for them, create a state in the middle of the Middle East, in the center of the Middle East, and the base of operations for terror attacks?

HAYDEN: No, no. Not at all, Chris. Keep in mind, I'm trying to be descriptive here, not prescriptive. I just fear this is what's going to actually happen. And it's not going to be just Iraq. It's going to be Eastern Syria, too, as that border loses all meaning. And I fear, Chris, for a while, we may have to treat this new radical Sunnistan the way we have been forced to treat Waziristan over the past decade.

WALLACE: Meaning what, a series of drone strikes, like as we took to combat core al Qaeda?

HAYDEN: Which means until we can change the facts and the realities on the ground, until we can change that which creates the threat to the United States, we have to consult our own interests and we have to defend the United States, the American citizens and American interests.

WALLACE: So, what does that mean? Air power, does that mean boots on the ground? I mean we went into Afghanistan?

HAYDEN: Right. Well, Chris, I'm making this up now, but why wouldn't we agree to cooperate with a newly, more fully autonomous Kurdistan to give ourselves a presence in the region where we could have robust intelligence and where necessary discreetly apply American power when we see a real threat to the United States?

WALLACE: So you are equating it to the tribal region between Iraq -- between Afghanistan and Pakistan, Waziristan, where we, as you say, apply power. Whether it's Special Forces, whether it's drone attacks. But we degrade them to the degree that we can?

HAYDEN: I am, Chris. And look, this is not a favorite outcome. I certainly wish my mind wasn't leading this progression of thoughts, but we are seeing the creation of another ungoverned area, and unlike Afghanistan, which is kind of in the middle of nowhere, as you already suggested, this is in the middle of the Middle East. This is within striking distance of Damascus and Jerusalem and Beirut. This is quite a dangerous thing that we're seeing unfold here. It's probably not 9/11, but it's certainly in the same area code.

WALLACE: That's pretty chilling coming from you, sir. You talk about this as being a state, the Sunnistan, the ISIS state, which would cross the border from Iraq into Syria. President Obama has just announced that he is going to seek $500 million from Congress, finally, to arm and train the Syrian rebels. At this late date, what can that accomplish?

HAYDEN: Well, your adverb finally is actually the most important part of your statement, Chris. This is much harder to do now than it would have been one, two, or three years ago when the situation in Syria was more malleable than it is now. But look, ISIS exists on both sides of that former border, and if we're going to try to cap their ability to do violence, we're going to have to hit it on both sides, in Iraq and in Syria. And so I think this is long in coming. It's late, but it's the right move.

WALLACE: Finally, U.S. intelligence officials, and there's been a big question as to why we were taken by surprise in the rapid advance of ISIS. U.S. intelligence officials say they had been warning for months that ISIS was gaining strength, gaining money, gaining fighters. You wrote recently that there are limits to what an intel officer briefing a president can accomplish, how much he can influence a president. You were in that position when you were at the CIA. Are you suggesting that President Obama ignored the warnings of ISIS because it didn't fit into his world view, his policies?

HAYDEN: It ignores far too strong a word, Chris. And you had Secretary of State Kerry on earlier suggesting that everyone was surprised by the Iraqi army melding the way it did in Mosul, but with regard to the growing threat of ISIS, my sense is the intelligence reports there were pretty strong. Look, this isn't limited to this administration. Anybody who has done intelligence knows what the burden of proof is for what I would call the unpleasant fact. And there, you really have to marshal a great deal of evidence to impress upon any decision maker or policymaker, something that is really inconsistent with what he thinks his policy preferences might be.

WALLACE: And it's not -- And in this case, you think he went with his policy preferences? You think he went with his policy preferences over the Intel?

HAYDEN: Chris, we created a vision when we went to zero with the number of forces in Iraq that this was going to be OK. That the Iraqis could handle this on their own, that the moderating effect of a limited U.S. presence was no longer needed. I think that was flawed policy. And frankly, it's hard to convince any policymaker that important policies are flawed.

WALLACE: General Hayden, thank you. Thanks for coming in today. It's always good to talk with you, sir.

HAYDEN: Thanks, Chris.

WALLACE: I recently had a chance to sit down with other top experts to discuss the crisis in Iraq. You can see that tonight in a special Fox News reporting Iraq and the rise of a terror state at 9:00 p.m. Eastern here on Fox News Channel.

When we come back, after several more primary defeats, is the Tea Party still a force to be reckoned with?

And Hillary Clinton continues to have money troubles. We'll get the panel back to hash it over.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. THAD COCHRAN, R-MISS.: We all have a right to be proud of our state tonight.

(CHEERS AND APPLAUSE)

COCHRAN: Thank you very much.

CHRIS MCDANIEL, R-MISS., SENATE CANDIDATE: I guess they can take some consolation in the fact that they did something tonight. By once again compromising, by once again reaching across the aisle, by once again abandoning the conservative movement.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

WALLACE: Senator Thad Cochran celebrating his victory and Tea Party challenger Chris McDaniel refusing to concede defeat. In the furiously fought GOP Senate primary, this Tuesday in Mississippi, and we're back now with the panel. Well, Cochran's victory in Mississippi is just the latest for the so-called GOP establishment. In fact, National Tea Party groups have spent around $40 million so far this year in the primary cycle, and have yet to show a big win to show for all of that money. Karl, you wrote an article this week in the "Wall Street Journal" under the headline "National Tea Party Groups Take a Beating." What's happened to the Tea Party this year? And I suspect a lot of our viewers are asking, did you forget about Eric Cantor's big loss in Virginia?

ROVE: Well, if you'd read the piece, you would have seen I did referenced Eric Cantor.

WALLACE: I did read the piece.

ROVE: In fact, the principal ...

WALLACE: The rhetorical question.

ROVE: Yeah, I didn't write the headline, but the principal of distinction I was trying to make was between the National Tea Party groups which have not had much success this year, and the local Tea Party groups which have had an enormous impact. If you take a look at the so-called establishment win, say for example, Kentucky and Texas and South Carolina where quote, establishment candidates won renomination or the victories in Arkansas and Montana, South Dakota, West Virginia, North Carolina and Oklahoma where the establishment candidates won without serious opposition, the fact is, is that these victories were achieved by the so-called establishment candidates having strong support among some elements of the local Tea Party groups. We have seen this odd result where the national Tea Party groups have been weakened because they've made heavy bets and have come up losers in each and every one of them.

WALLACE: When you said the national Tea Party, who are you talking about?

ROVE: Like Senate Conservative Fund or the Tea Party Patriots or the Freedom Works or Club for Growth. Club for Growth said at the beginning of the season, we're going to primary nine conservative Republicans in the House who are not conservative enough for their districts. Eight of the nine escaped opposition all together. And the one who got serious opposition prevailed, Mike Simpson of Idaho (ph) by two to one. So, but my point is this, these national groups are out of touch with the local groups who are involved. Mississippi is the one outlier. They're the national groups and the local Mississippi groups who are united behind Chris McDaniel. And there going to be some long standing wounds, both in Mississippi and across the country as a result of Thad Cochran's amazing win. Think about this, 30 years ago is the last time we had a Senate primary, in which there were more people voting in the run-off than voted in the primary, and I can't find a single instance where an incumbent senator came in second in the primary and won the run-off.

WALLACE: Brit, is Karl right? Has the Republican -- so-called Republican establishment found a way to handle the Tea Party? Whether in the national case, just beating it, and in the local case, bringing them into the tent?

HUME: That's one way of looking at it. But another way to look at it is this, we now have nationally a kind of Tea Party establishment. Those are the larger groups to which Karl is referring that operate very much like these Washington-based operations that the Tea Party people complain about. And what has characterized the Tea Party at its strongest has been energized voters. Grassroots voters. Grassroots energy. That's what knocked off Eric Cantor. The local Tea -- the national Tea Party groups took a pass on that one. A friend of mine, a guy I know who runs a PAC for the Tea Party Patriots said that yeah, we looked at that guy down there in Virginia. And we liked him, but we've made all of our big bet done in Mississippi. Well, they lost in Mississippi and the local Tea Party group pulled the professor and ran off making across the finish line by a remarkable degree. So to the extent the Tea Party lives on, I don't think it's beaten. I think its energy is there. The Republican Party needs it, but I think these big well- moneyed groups have constituted a kind of establishment of their own, and they're not doing very well.

WALLACE: Julie, I want to change subjects on you because Hillary Clinton continues to take heat on the money issue. Money problems. I want to -- and she makes a lot of money making speeches. Put this up on the screen. She was paid $300,000 for a speech at UCLA in March, and students at the University of Nevada-at Las Vegas are asking her to reject the $225,000 she's getting for a speech she's going to be making there in October. And once again, she had to clean up the remarks she made about she and her husband being dead broke when they left the White House in 2001. Take a look.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, FORMER SECRETARY OF STATE: I shouldn't have said, I think five or so words that I said, but you know, my unartful use of those few words doesn't change who I am, what I stood for my entire life, what I stand for today.

(END VIDEO CLIP)

WALLACE: Julie, what do folks you talk to at the White House and others in Democratic circles, Democratic -- what do they make of her problems on this issue?

PACE: They clearly feel like she got caught off guard by this issue. And it's hard to understand how she did get caught off guard because this is an issue that comes up in every presidential campaign when you're dealing with candidates that have a lot of money. Mitt Romney, we just went through this. I think the hard thing for her is she has to find a way to change the narrative, and it seems like all the information that comes out just feeds the idea that she is incredibly wealthy, that she can pull $300,000 for a speech, it's a pretty astounding figure, and they haven't figured out how they can, you know, say I can make that much money. We have been very lucky, and I still, though, have empathy for you. I still can understand, you know, the plight of hard working Americans. Somehow they have to figure out how to fix this.

WALLACE: Kirsten, The Washington Post got on this story this week and they did a very interesting story. They figured out that Bill Clinton was paid $104.9 million for speeches in the first 12 years after he left the White House. Can Republicans use this to say both Clintons are out of touch with what regular folks are going through?

POWERS: Just making the money is not enough to be out of touch. So and I think that's true of a Republican or a Democrat. However, the things she's saying makes her seem out of touch. And so, when you're referring to multiple houses while you're talking about how broke you are, that seems out of touch. The other comments that she made where she was sort of alluding to Mitt Romney, that she pays a different tax rate, and so therefore it's not that big of a deal and she's not truly well off, makes her seem out of touch. And why this would be a surprise for them, this is what Republicans did to John Kerry. It's no different. He was married to a very wealthy woman. They portrayed him as this very out of touch senator. And so, clearly, they're going to do it to the Clintons again, and they should be prepared for it.

WALLACE: Thank you, panel. See you next Sunday. To be continued.

Up next, our power player of the week: how one history buff is teaching young people about the great American experience.

(COMMERCIAL BREAK)

WALLACE: It's funny how one chance event can change a life. A man walks into a store and sparks an interest that endures over half a century. There may be no better example than our power player of the week.

(BEGIN VIDEO CLIP)

ALBERT SMALL, PHILANTHROPIST AND COLLECTOR: I had a girlfriend in New York. And I started dating, and she ultimately tried to be my wife.

WALLACE: And so began Albert Small's 60-year passion. While Shirley was busy that day in 1951, Small went into a book store and came across a manuscript on milestones in Washington.

SMALL: I bought the book. That's got me started collecting Washington history.

WALLACE: Over the years, Small became a very successful developer. And he kept buying.

SMALL: I bought George Washington's copy of the Declaration of Independence. That was several million dollars.

WALLACE (on camera): How many presidents do you have signed letters from?

SMALL: Oh, I have them all.

WALLACE: Washington?

SMALL: Oh, everybody.

WALLACE: Lincoln?

SMALL: Oh, sure.

WALLACE (voice over): But Small says the key is to get an important letter, like the one he bought two years ago. That Washington wrote about Pierre L'Enfant who planned the nation's capital. The price, $290,000.

(on camera): Do you tell your wife when you're buying these things?

SMALL: Shshsh, be very quiet.

(LAUGHTER)

WALLACE: Does it make you happy to see all of these things that you have gotten over the years?

SMALL: I love it. And it's part of my life.

WALLACE (voice over): At age 88, what Small loves doing now is giving his collection away. He donated thousands of objects on the Declaration of Independence to his alma mater, the University of Virginia. Now he's giving his collection on D.C. history to George Washington University.

(on camera): Does it make you sad to give these treasures away?

SMALL: I've lived with them all my life. And obviously I won't be around forever.

WALLACE (voice over): One of the Small's favorite pieces is this signed copy of General Eisenhower's order, launching D-Day.

UNIDENTIFIED MALE: (INAUDIBLE)

SMALL: We have failed on that one day. We would have lost the war to Germany. Germany would have taken over the world. We would be speaking German today.

WALLACE: Four years ago, Small started a program to send 15 high school students to Normandy each year to study what one soldier did there.

AMANDA, COVENTRY, RI: I was reading about it. I didn't really understand the distance that he could go to to actually get up here.

UNIDENTIFIED MALE: What we're working towards, getting their stories out. They live on in what we're trying to do.

WALLACE: That's what Albert Small's years of collecting have been about, to celebrate the American experience and help keep it alive.

SMALL: Makes me feel that I have left a mark. The message I want them to get is that we're lucky that we have what we have today, and enjoy what we have.

(END VIDEO CLIP)

WALLACE: Albert Small wants his Normandy project to live on. This year, he set up a permanent fund to keep sending young people there, to bear witness to how Americans sacrificed for freedom. And we have a new addition to our FNS family. Evelyn Lee Loper joined the team Friday. I have to say, she looks awfully tall for a baby. Evelyn, mom, dad, and older sister Eliza are all doing well. And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."

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